SINO-MALAYSIAN consortium IWH-CREC (ICSB), which lost the Bandar Malaysia development deal on Wednesday, insisted today it has made all necessary payments, disputing Putrajaya’s claim that it had failed to pay up after 12 extensions.

“To date, ICSB has fulfilled all the required payment obligations under the SSA on its part towards TRX.

“ICSB has sufficient financial resources and capabilities to ensure the smooth and successful execution and implementation of the development of Bandar Malaysia,” ICSB said today in a statement (see below).

The consortium’s reply came two days after Ministry of Finance (MoF) unit and Bandar Malaysia owner TRX City Sdn Bhd announced the deal was terminated as ICSB had failed to make payment.

ICSB is a 60:40 joint venture between China Railway Engineering Corporation (CREC) and Iskandar Waterfront Holdings Sdn Bhd (IWH), which in turn is 40% owned by the Johor state government.

The consortium signed a RM7.42 billion deal on December 31, 2015, to buy a 60% stake in the 197ha Bandar Malaysia development, which it had valued at RM12.35 billion. 

The deal was the third and final part of a financial rationalisation plan for 1Malaysia Development Bhd, the previous owner of Bandar Malaysia. 

Putrajaya announced two days ago it was seeking fresh investors for Bandar Malaysia after ICSB failed to pay for a 60% stake despite numerous extensions.

“While the agreement has undergone repeated extensions, IWH-CREC could not meet the obligations outlined in the Conditions Precedent under the SSA during the stipulated deadlines. As a result, the share sale agreement between the parties stands null and void with immediate effect,” TRXCSB said in a statement today.

TRXCSB said its sole shareholder, the MoF would retain 100% ownership of the Bandar Malaysia site and would invite bids to be the new master developer.

According to the Wall Street Journal, the RM7.42 billion deal to develop Bandar Malaysia had been scuppered by the Chinese government’s refusal to give the state-owned CREC the green light to complete the deal.

WSJ said it had seen the finance ministry’s document on problems with the sale, concluding that the deal, said to be a bailout for ailing 1MDB, fell apart after the Chinese government refused to authorise the investment in Bandar Malaysia, a major residential and commercial real-estate project in Kuala Lumpur that was to have been developed by 1MDB.

The RM7.42 billion deal was a cornerstone of efforts by Putrajaya to sell off 1MDB assets after the fund ran up more than US$13 billion (RM56 billion) in debt. 

The American business daily noted that the failure was a blow to Prime Minister Najib Razak, who in 2015 said the deal was “the final major milestone in the 1MDB rationalisation plan”. – May 5, 2017.